UK construction is still shrinking, but there's a hint of hope

Business Jan 07, 2026

For the 12th month in a row, UK construction activity stayed in contraction mode—December's PMI came in at 40.1 (anything below 50 means shrinkage).
Every part of the sector took a hit: housing dropped to pandemic-era lows, and commercial and civil engineering weren't far behind.
It's the longest slump since the global financial crash of 2007-09.

Why does this matter?

Even with these tough numbers, construction companies are feeling more upbeat about this year—37% expect things to pick up this year.
That optimism comes from new investments, lower interest rates, and inflation cooling off.
This matters for anyone watching housing goals (like Labour's big home-building promises) or just curious about where the UK economy might be headed next.